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Role of IT in AML / KYC Arun Pingaley Head – Functional Solutions and Experts Group, Reveleus – an i-flex business AML /

Closed Loop. Clear Vision. Role of IT in AML / KYC Arun Pingaley Head – Functional Solutions and Experts Group, Reveleus – an i-flex business AML / KYC Seminar Indian Institute of Bankers Hotel Taj Westend, Bangalore October 5, 2006. Sept 28, 2006. Brief Introduction & Background.

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Role of IT in AML / KYC Arun Pingaley Head – Functional Solutions and Experts Group, Reveleus – an i-flex business AML /

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  1. Closed Loop. Clear Vision. Role of IT in AML / KYC Arun Pingaley Head – Functional Solutions and Experts Group, Reveleus – an i-flex business AML / KYC Seminar Indian Institute of Bankers Hotel Taj Westend, Bangalore October 5, 2006 Sept 28, 2006 AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  2. Brief Introduction & Background AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  3. i-flex acquires Mantas AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  4. Antwerp Diamond Bank Reveleus: Clients / Analyst Coverage Top Tier Risk Clients Analyst Coverage Partners Other Customers AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  5. Reveleus in Risk & ComplianceReveleus Basel II Solution emerges as the market leader January ‘06 June ‘06 December ‘05 August ‘05 • Reveleus was named as a leader in Gartner’s Magic Quadrant • Tower Group named Reveleus the “crown jewel” of i-flex and ranked Reveleus Basel II highest • Celent group considers Reveleus as the North American Market Leader in Basel space AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  6. AML / KYC – a solution provider’s viewpoint AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  7. Three major categories of requirements • OFAC Compliance • US Treasury’s Office of Foreign Assets Control • Bank Secrecy Act • KYC / EDD • Know your customer • Enhanced Due Diligence AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  8. OFAC Compliance • Requirements • Very US specific, OFAC publishes a black list of Individuals, Companies, etc. for whom banking transactions should not be allowed by US Banks • This black list is referred to as the ‘SDN Database’ where SDN stands for Specially Designated Nationals • Further, individual banks and governments (for foreign banks operating in the US) too maintain a separate black list of their own • All banking transactions need to lookup the SDN Database AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  9. OFAC Compliance • Solution Components • SDN Database • Compilation and storage of the database • A filter for looking up this database • Regular updates to the SDN Database • Real-Time Monitoring of all banking transactions & Exception Reporting • Technical Requirements • Data Model & Data Loading • Split Second Database Lookups • Near Zero false matches • Real Time Alerting AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  10. Bank Secrecy Act of 1970 • Purpose • Deter laundering • Create an investigative "paper trail" for large currency transactions • Improve detection and investigation of criminal, tax, and regulatory violations • Requirements • CTRs (Currency Transaction Reports), • SAR (Suspicious Activity Report) • CK (Check Kiting) AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  11. Bank Secrecy Act of 1970 • Solution Components • Data Warehouse • Optimal storage of all transactional data • Rules Engine • BI / Reporting Tools • CTR / SAR generation • Artificial Intelligence based reporting (Pattern Identification) • Business Rules based reporting (Pattern Detection) • Case Handling • Work Flow Management • Security • Document Handling • Operational Controls • For Check Kiting – control unsecured overdrafts and write-offs • Check Kiting - refers to use the lag time between check cashing and check clearing to generate illegal revenue AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  12. BSA – Solution Details • Operational Data Stores • Transactional Data • Rules Engine for Detection • Rule Patterns • Profiling • Outlier Detection • Text Mining • Sequence Matching • Link Analysis • Networks of Individuals • BI / Reporting Tools • Workflow Tools (BPEL Engines – Business Process) • Alerting Engines AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  13. KYC / EDD • Background • The US Patriot Act, requires, banks to “Know Your Customer” (KYC), before opening accounts for them. • EDD refers to Enhanced Due Diligence Rules, refer to policies that help an institution to detect and deter fraudulent transactions • Requirements • 3 minimum checks at the time of account opening • OFAC • Credit Bureau • Fraudulent Database AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  14. KYC / EDD – Solution Components • Solution Details • List Lookups • Pattern Matching, Text Mining, Link Analysis, Profiling • Integration with Account Opening Software • Workflow Capabilities AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  15. High Level Solution Architecture AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

  16. Closed Loop. Clear Vision. Role of IT in AML / KYC Arun Pingaley Head – Functional Solutions and Experts Group, Reveleus – an i-flex business AML / KYC Seminar Indian Institute of Bankers Hotel Taj Westend, Bangalore October 5, 2006 Sept 28, 2006 AML/KYC Seminar, Indian Institute of Bankers, Hotel Taj Westend, Bangalore – October 5, 2006

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